Farm Credit’s sure isn’t singin’ the Blues with all the money they’re making on questionable home loans. But they might be singing Folk.
The Farm Credit System’s (FCS) Central Kentucky AgCredit is eager to extend home purchase loans, even if the purchaser isn’t a farmer, rancher or producer. In fact, Central Kentucky AgCredit is excited to now extend loans to folk singers! But don’t just take our word for it, check out their video, which features a folk singer, now homeowner, with questionable enough credit that seven banks were unable to lend to him. In fact, the banks were unable to lend because Fannie Mae, a government-sponsored enterprise (GSE) like the FCS, rejected the loan. But the taxpayer-backed FCS, through Central Kentucky AgCredit, was happy to take his business. And be sure to remember that Central Kentucky AgCredit “provide[s] funding for homes located in rural areas, farms used for vacationing or hobby activities and even farm operations used to draw tourism.”
We wish that this were just an isolated instance of poor judgment, but Farm Credit’s history with home loans is fraught with examples of properties that shouldn’t be covered because they have little to do with farming. These include mansions in the suburbs of Denver and vacation properties in Hawaii.
The worst part of this is that it is technically legal. That’s right: it’s legal for the Farm Credit System, a government-sponsored enterprise (GSE) implicitly backed by taxpayer dollars to make loans for vacation properties. And that’s because the lending criteria are incredibly lax.You too can qualify for a home loan from Farm Credit, so long as you fulfill one of these criteria:
- The property must be at least 5 acres;
- The town where the property is located must have a population of 2,500 or less;
- The potential owner must have the intent to farm;
- The property must yield at least $500 in gross farm income.
The FCS was created to make sure American agriculture could thrive, and that includes making home loans to farmers, ranchers and producers. It does not include making loans for homebuyers just because they’re in a rural locale, or just because they are buying a plot of land more than five acres. Congress must step in to fix the law so that the FCS is sticking to its mission to support farmers, ranchers and producers. If it doesn’t, Farm Credit will overextend itself, and then taxpayers will be singin’ the Blues.